Avram Patt grew up with the cooperative model. The former general manager of WEC, current member, and state representative spent his youth in the Bronx, in a home surrounded by the Amalgamated Housing Cooperative: a nearly hundred year old housing co-op funded by a union, the Amalgamated Clothing Workers of America, to be affordable housing for workers. Patt’s father, a doctor, served the neighborhood, and his parents moved into a co-op apartment after their children left home.
There are many different kinds of cooperatives: some are ancient; new ones are incorporating all the time. To honor Co-op Month, suggested Patt, it’s worth recognizing that cooperatives are all around us.
The origin of cooperatives is usually traced to England during the Industrial Revolution, where cooperative arrangements offered security and stability in a hard working climate. The Rochdale Society of Equitable Pioneers, organized in 1844, is credited as the first successful co-op. Founded on a set of principles – predecessors to today’s Seven Cooperative Principles – it’s often recognized as a consumer cooperative business model.
But much earlier, in 1752, Benjamin Franklin is recognized as starting the first cooperative business in America: a mutual fire insurance company, the Philadelphia Contributionship, which still operates.
What not everyone recognizes, said Patt, is “the breadth of the cooperative business model. Most people know there are electricity co-ops, food co-ops, credit unions, and agricultural co-ops.” But many other businesses can be co-ops, he said. “I used to like to surprise people telling them that Ace and True Value hardware stores are cooperatives.”
Types of Co-ops
Hardware stores are examples of purchasing or retail cooperatives: member stores participate to benefit from purchasing economies of scale. Ace Hardware is the largest retail co-op in the country. Some farm supply stores are retail cooperatives too.
Producer cooperatives are designed for member producers to increase their market access. In some cases, the producer cooperative adds value to the core product, which further expands reach and income. WEC neighbor Cabot Creamery Cooperative adds value to milk from member producers – dairy farms – by bringing milk-based products to market. Organic Valley declares on its website “Our farmers own the company. Not the other way around,” highlighting the social and environmental benefits of being governed by its producer members.
Worker cooperatives are companies owned and governed by the people who work there. Many of these describe themselves as employee-owned. They can have a few employee-owners, or hundreds. Examples in or near WEC’s service area include Catamount Solar in Randolph, Rabble Rouser in Montpelier, and Timber Homes in Vershire.
The kind of co-op that usually springs to mind is the consumer cooperative model, in which members own the cooperative and benefit from the goods and/or services it provides. There is a lot of diversity among consumer cooperatives. WEC is one; so are credit unions, food co-ops, childcare co-ops, and many others.
For some, like WEC, member-owners are determined by service area. You’re a WEC member because WEC supplies power to the place you live or work. Many other consumer cooperatives don’t require only members to participate in the consumer piece: most, but not all, food co-ops allow non-members to shop; Mad River Glen sells lift tickets to non-shareholders.
There are also hybrid or multi-stakeholder cooperatives, in which different groups of people may participate in membership and governance is representative of these different groups. Some housing cooperatives, for example, invite membership from community investors, residents, and staff.
But how are co-ops doing? After all, many consumer cooperatives were formed to bring services to people who couldn’t otherwise access what they needed – and now we live in an era of online shopping.
Anecdotally, interest in consumer cooperatives is growing. Micha Josephy, the executive director of the Cooperative Fund of the Northeast, recently reached out to Avram Patt to talk about recruiting investors to the fund. Investors provide the capital that co-ops borrow to start up or expand. Patt, who has maintained an account with the fund for many years, explained that the fund is facing increasing demand for financing.
Worker cooperatives are certainly growing. According to a 2022 analysis from Fifty by Fifty, the number of worker co-ops grew more than 30% since 2019, “an astonishing figure when you consider the obstacles to new businesses during the pandemic,” wrote author Karen Kahn.
The same report showed that co-ops are closer to representative parity in employment than many other business models. Among surveyed co-ops, 52% of co-op workers identified as female, 4% nonbinary, and 44% male; 47% identified as people of color. Pay parity is also a factor in what attracts co-op employees: where corporate CEOs may earn 350 times the wage of a typical worker, the highest earner in a worker co-op usually earns no more than twice the wage of the lowest earner.
Using food co-ops as a model, consumer interest still appears high. The Neighboring Food Co-op Association – whose members include most but not all Vermont food co-ops – claim to “generate over $147 million in annual revenue, and sell more than $51 million in local products.”
Co-operatives are all around – serving our needs, employing our workers, and providing a more equitable and healthy vision of business than profit-driven models.
Fun facts about cooperatives:
- The first known cooperative in America was founded by Benjamin Franklin.
- The number of worker cooperatives in the US grew more than 30% between 2019 and 2021.
- There are more than 50,000 member-owners of food store co-ops in Vermont.
- American rural electric cooperatives serve more than 42 million people.
- 48 out of 50 US states have at least one rural electric co-op.
- In corporations, the pay ratio between CEOs and a typical worker is 350:1. In worker co-ops, the pay ratio between highest and lowest wage earners is typically not more than 2:1.
- Karen Kahn, “Latest Worker Co-op Survey shows More Coops but Fewer Workers”, Fifty By Fifty; February 2022
- Lynn Pitman, “History of cooperatives in the united states: an overview”, UW Center for Cooperatives, revised Dec 2018